Why It Matters

The Financial Crimes Enforcement Network (FinCEN), a Treasury Department bureau, has dramatically restricted access to beneficial ownership information, or the data that identifies who actually owns and controls companies, according to a report from the Government Accountability Office.

The Corporate Transparency Act, enacted in 2021, was designed to close a critical loophole that allows criminals, corrupt officials, and bad actors to hide behind layers of corporate ownership. By requiring legal entities to disclose their beneficial owners to FinCEN, the law aimed to give law enforcement and national security agencies a crucial tool for tracking illicit financial flows. But implementation has stalled, caught between legal challenges, bureaucratic delays, and a regulatory overhaul that has gutted much of the law's intended effect.

The Big Picture

A new Government Accountability Office report released in June 2026 documents the breakdown. It reveals how FinCEN's beneficial ownership reporting system, which began operating in early 2024, has seen access requests plummet, compliance procedures remain undefined, and the agency's rollout of its multi-phase access program has ground to a halt. The findings expose a fundamental tension: while FinCEN works to build safeguards around the data it collects, it has simultaneously narrowed the pool of companies required to report, and federal agencies that are supposed to use this information for law enforcement and national security purposes are increasingly locked out.

The law required certain legal entities to report their beneficial ownership information, including the names and details of individuals who directly or indirectly own or control companies, to FinCEN. The agency would then safeguard that information and make it available to authorized federal agencies engaged in national security, intelligence, or law enforcement work.

Implementation began in earnest in early 2024, when FinCEN started securely collecting, processing, storing, and managing beneficial ownership information. The agency outlined an ambitious five-phase program to gradually grant federal agencies access to the data. Phase One was modest: FinCEN granted six federal law enforcement agencies access to its IT system.

By October 2024, searches in FinCEN's beneficial ownership information system fell sharply and remained generally low through March 2026. Three of the six pilot agencies that had gained access ended their participation in the program altogether. When FinCEN paused accepting and processing access requests under Phase 2 in December 2024 due to ongoing lawsuits challenging the underlying law, the momentum stalled further.

The agency resumed processing Phase Two access requests in spring 2025, and by August 2025, FinCEN was processing requests from 22 federal agencies. FinCEN largely paused Phase 2 access request processing again in December 2025 while working to finalize its interim final rule. The agency has also delayed time frames for implementing the remaining program phases entirely.

The practical result is clear: federal agencies that are supposed to use beneficial ownership information for law enforcement and national security purposes are largely unable to access it. FinCEN attributed the decline in agency searches to ongoing lawsuits challenging the Corporate Transparency Act, program changes, and its March 2025 interim final rule.

In March 2025, FinCEN issued an interim final rule that fundamentally altered the Corporate Transparency Act's scope. The rule exempted approximately 99 percent of entities previously required to report their beneficial ownership information. In practical terms, this means the vast majority of companies that the law was designed to cover no longer have to disclose their owners to FinCEN.

The exemptions came in response to litigation challenging the law's constitutionality, but they also reflected policy choices that narrowed corporate ownership transparency far beyond what courts had required. Federal agencies gained access to a database that contains far less information than originally contemplated.

FinCEN has invested resources in building safeguards and oversight procedures for beneficial ownership information that few companies are now required to report. Meanwhile, the agencies that are supposed to use this information for anti-money laundering compliance and national security purposes have limited access to what little data exists.

The agency conducts monthly reviews to monitor individual users' access to and use of its IT system and automatically deletes inactive users. It began conducting annual audits of four pilot agencies in early 2025 to assess compliance with program requirements.

FinCEN revised its oversight procedures in early 2025 to include guidance for escalating compliance concerns. However, the new procedures do not specify the types of noncompliance that would result in suspension or termination of an agency's access. As of March 2026, FinCEN officials said the agency was developing additional procedures to address noncompliance, including suspensions or termination of access. These procedures are still being developed, more than two years after the system became operational.

The absence of clear compliance standards creates ambiguity about what happens if a federal agency misuses beneficial ownership information.

The Bottom Line

The statutory requirement for ongoing GAO scrutiny reflects Congress's intent to maintain oversight of how the Treasury Department implements this sensitive authority.

FinCEN faces competing pressures: it must defend the constitutionality of the Corporate Transparency Act in court while simultaneously implementing regulations that have largely exempted companies from reporting. It must build safeguards for beneficial ownership information while granting federal agencies access to that information, and it must do all this while the agencies it is supposed to serve have largely stopped trying to access the system.

The result is a beneficial ownership reporting regime that has been substantially diminished in scope, restricted in access, and uncertain in its future.

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